China could be world's biggest oil importer by October

An oil pump at work in the desert oil fields of Sakhir, Bahrain. China is set to overtake the U.S. as the world's biggest oil importer. (Associated Press)

China’s net oil imports are set to overtake the world’s biggest oil importer — the U.S. — in October, according to a short-term outlook by the U.S.-based Energy Information Administration.

China’s net liquid fuel imports are forecast to rise to 6.45 million barrels per day, while those of the U.S. will drop to 6.23 million barrels per day, in October according to the EIA.

U.S. crude imports have been dropping since 2005 as domestically produced shale oil and gas meet an increasing share of American demand.

China meanwhile, is seeing rising industrial production and individual consumption, despite a slowdown in growth in the past two quarters.

China imports 60 per cent of its oil, mainly from the Middle East and Russia, while the remaining demand is met by its oil producer PetroChina.

The gap between China’s need for oil and demand from the U.S. is expected to widen in coming years, the EIA said.

China has kept tight control over crude imports to ensure stable domestic oil supply, with state giant Sinopec and PetroChina controlling nearly 90 per cent of the country's total crude oil imports.

But now it is considering opening up its crude import market to more refineries, according to traders and a government document seen by Reuters.

This year small refinery operator ChemChina has begun operating in the sector with an import quota of 10 million tonnes for 2013. Other new entrants would be awarded similar quota in 2014, according to a Reuters report.

China needs new refining capacity to meet increased demand.

China imports about 5.7 million barrels per day — nearly 6 per cent of global supply, according to industry estimates, offering potentially lucrative opportunities to global producers and traders. Chinese demand has been a key factor in a long-term rally in oil prices.

Brent crude prices were close to $111 US per barrel today in European trading, after Egypt declared a state of emergency and US oil inventories fell amid signs of revitalization of the U.S. economy.

West Texas Intermediate for September delivery rose 48 cents to close at $107.33 US a barrel on the New York Mercantile Exchange.